The Federal Reserve Bank of Philadelphia’s general economic index fell to 9.3 this month from a reading of 19.8 in July that was the highest since March 2011. Readings greater than zero signal growth in the area, which covers eastern Pennsylvania, southern New Jersey and Delaware.

The median forecast of 54 economists surveyed by Bloomberg called for a reading of 15. Estimates ranged from 7 to 23.

Industrial production in the U.S. was unchanged in July as a slowdown at factories overshadowed an increase in mining.

The reading for output at factories, mines and utilities followed a 0.2 percent gain the prior month that was smaller than previously reported, a report from the Federal Reserve showed today in Washington. The median forecast in a Bloomberg survey of 82 economists called for a 0.3 percent rise in July.

Manufacturing, which makes up 75 percent of total production, declined for the first time in three months.

Month-Over-Month Manufacturing Declines

Manufacturing is down month-over-month but only slightly. Let's look at some longer term trends in manufacturing and industrial production.

Industrial Production Percent Change From Year Ago

Manufacturing Percent Change From Year Ago

Trends are certainly weakening in manufacturing and industrial production.

With a weaker than expected Philly Fed, negative manufacturing, flat industrial production numbers, and a declining outlook at Wal-Mart and other retail stores, one might have thought treasury yields would drop.

Nonetheless, treasury yields rose, presumably on the assumption the Fed is still going to taper asset purchases starting next month and the economy will strengthen.

The first assumption is questionable, the latter is highly overoptimistic.

$TNX 10-Year Treasury Yield

$TYX 30-Year Treasury Yield

Yields Rise Significantly in Two Days

In the last two days Yield on the 30-Year long bond rose from 3.602% to as high as 3.837%, a rise of 23.5 basis points (nearly a quarter percentage point).

Yield on the 10-Year treasury note rose from 2.552% to as high as 2.821%, a significant rise of 26.9 basis points (over a quarter percentage point).

Curve Watchers Anonymous offers the following chart to help put things in proper perspective.